Traditional online transactions have severe limitations. Online transactions are usually involving intermediaries like bank. The involved of intermediaries increase transaction cost when transaction activities take place. Furthermore, it is time consuming and may require a lot of procedures. The advantages of using blockchain in managing and storing the record data information are blockchain able to eliminate central points of attack and failure, enhance security, reduce errors and transaction cost, increase level of efficient and transparency in transaction information.
Blockchain allows financial transaction without going through a third party such as bank, and Credit Card Company. The eliminations of third party enable users greatly reduce transaction cost. Besides, blockchain ledger simplifies the process of transaction activities that enable users saving their time and increase their efficient in managing the asset. Online transaction for example interbank transactions can potentially take one or two days for settlement, however blockchain able to reduce the processing time from days to minutes because blockchain processed the transaction 24 hours per day.
Other than that, blockchain enable users reduce the error in trade process by encrypting the transaction records. Blockchain data is complete, accurate and widely available to the users. Therefore, high quality of data enables users reduces error in their trade. Furthermore, blockchain make online transactions safer by using the private key and provide transparency transaction information to prevent fraud, and any alteration in the records. Any alterations in transaction information are required to backlink to the very first block. Blockchain also will ensure the records information is only provided to related parties and department by verify the identity of the individuals who requested the information. Therefore, blockchain provide high secure in protective the records information.
In addition blockchain able to avoid hacker hacking to the system because blockchain ledger is a distributed and decentralized ledger therefore there is no chance for hacker to hack into central database. Furthermore, blockchain is more secure than any online transaction because it will require users having two keys to enter into the records which are public keys and private keys. This system is more efficient and secure than any firewall and able to provide better able to withstand malicious attack.
The disadvantage of using blockchain in managing and storing the record transaction information are blockchain having storage constraint, privacy problem, and limited scalability. Storing data on blockchain means the data is stored by every full node in the network and indefinitely. Since the data store in blockchain is immutable, therefore there is a huge cost on the data storage and system to manages and maintain the storage database of blockchain. Besides, each of the block of blockchain are having limited size of storage therefore it require gigantic storage database to store all the records information.
Furthermore, all the transactions information is available on the network. The dates and amount of transaction are recorded on public ledger, even thus there is not directly tied to the users name and identity but the transactional patterns can be observed by public. Other than that, blockchain like Bitcoin have consensus mechanisms. It will require every participating node to verify all the transaction on the ledger. However, this will limits total number of transactions that a blockchain can be process and induce limitation on the scalability of blockchain in storing the data and transactions information.